Study: 28% of U.S. jobs are linked to food and agriculture

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Dive Brief:

A new study commissioned by 22 food and agriculture organizations found that more than 20% of the nation’s economy and 28% of all American jobs are linked either directly or indirectly to the food and agriculture sectors, according to the Food Marketing Institute.

The nationwide research also found the U.S. exports $146.32 billion in food, with a total food and industry economic impact of $6.7 trillion.

“We have long understood that the food and agriculture industries play an absolutely vital role not only in feeding Americans, but also in feeding and growing the nation’s economy," FMI President and CEO Leslie G. Sarasin said in a written statement with the report. "This historic farm-to-fork economic analysis quantifies the impact of the jobs, wages, taxes and exports the industry makes possible.”

Dive Insight:

Because so many U.S. jobs and economic interests are vested in food and agriculture, renegotiations of the North American Free Trade Agreement are being watched closely by industry analysts and farmers alike.

One of the main goals of the NAFTA trade talks is simply to modernize the agreement, which was set in 1993. Digital trade and telecommunications have modernized in the last quarter century, so many want the trade deal to be retooled to reflect the current working environment.

The thornier aspect of renegotiations involves the possibility that President Trump may want to drastically increase taxes on food items imported to the U.S. from Canada and Mexico. Many argue this strategy would drive consumers to buy American-grown foods and boost growth. But U.S. farmers are concerned that neighboring countries would likely respond with hefty taxes of their own on surplus grains, dairy, fruit and eggs.

This new research shows that the U.S. exports more than $146 billion in food each year. If trade negotiations go south, that’s a significant amount of surplus food. The lost revenue could have numerous impacts, from severe price deflation to massive job cuts.

Agriculture Secretary Sonny Perdue said earlier this month that he is working on a contingency plan to protect American farmers and ranchers in case NAFTA talks take a turn for the worst. Perdue told Politico he doesn't think the plan will be needed, but did concede that withdrawing from NAFTA could have "some tragic consequences" for U.S. producers.

In the 24 years since NAFTA was signed, the U.S. agriculture industry has reaped tremendous growth. U.S. food and agricultural exports to Canada and Mexico totaled $8.9 billion when the deal was formed in 1993. Since then, exports have more than quadrupled to $38.6 billion in 2015.

The outlook for the U.S. food industry in the future is positive, as well. As a whole, it's expected to grow at a CAGR of 2.9% through 2022, according to the 2016 Food Packaging Trends and Advances report from PMMI, the Association for Packaging and Processing Technologies.

If there are problems with the NAFTA renegotiations, which are now projected to finish in 2018, these numbers may no longer be an accurate reflection of future growth.